The first quarterly SME business trends survey results for 2012 from ISME, the Irish Small & Medium Enterprises Association, confirms that business confidence among the SME sector has improved, with confidence levels at their best in five years. While a huge level of uncertainty still remains over the domestic economy, the export market and a portion of the international situation seems to be improving, led by improved figures from the US, both of these factors are having a positive effect on confidence.
– Following a sharp decline in Q4 ’11, confidence has recovered, while still in negative figures, to minus 1, from a -24. Business expectations have hit a +5, a massive increase from the previous quarter of -26.
– Exporters are by far the most optimistic about the economy and its future and their Business expectations have risen to a +32, while all the other key indicators for exporters are in the plus range with export outlook at a high +64. Exports in services continue to rise and should increase at a rate of 3.6% for the year.
– The Retail Sector remains the most pessimistic at -14, followed by Manufacturing -6, while Services have come back to a +3 from a -6 in Q4, 2011.
– Current turnover remains in negative territory, albeit improving, with sales expectations rising to +23 from a +10 in the previous quarter. The Association expects a further modest growth through the remainder of 2012.
– While SMEs continue to reduce employment, the number of companies with fewer employees has reduced on the previous quarter, with a net 11% of companies reducing employment, an improvement of 2%. While employment expectations have improved, the pick-up in jobs is quite weak and needs a boost from Government.
– Investment, both current and future has shown a gradual improvement, with more SMEs intending to increase their investment than those who intend to reduce. However it is expected that investment will remain subdued and as the household spending is still in decline, the retail sector will continue to operate well below its peak where there is still excess capacity. The difficulty in accessing bank credit for new opportunities will also act as a dampener on new investment
– The outlook for a return to profits has continued to improve in this quarter although a majority of businesses are still in loss making territory.
The Quarterly Trends survey was conducted at the end of March and had a response rate of 21% with 630 responding.